June 27 (Bloomberg) -- Boston Celtics fans donned kelly- green top hats and puffed on cigars in tribute to the late Red Auerbach, the franchise's cornerstone who guided the team to nine championships as coach.

Last week's hoopla surrounding Boston's National Basketball Association-best 17th championship, including a parade, champagne toasts and a Gatorade bath for fourth-year coach Doc Rivers, didn't make up for one deficiency. The Celtics are nowhere near the most-valuable NBA team, a distinction that goes to the New York Knicks, whose 23-59 regular-season record wasn't good enough for a playoff berth.

Even after seven straight losing seasons and a sexual- harassment suit involving former coach Isiah Thomas, the Knicks are worth a league-high $608 million, according to estimates by Forbes magazine. The Celtics, with an NBA-best 66-16 regular- season record, were valued at $391 million in the same December report, 11th in the 30-team league.

``It's not right,'' said Marc Ganis, president of SportsCorp Ltd., a Chicago consulting firm. ``The Knicks are arguably one of the worst-managed teams in professional sports in the country, yet their franchise has the most value.''

Market size explains the paradox. The Knicks, the Los Angeles Lakers at $560 million and the Chicago Bulls at $500 million are the three most-valuable NBA franchises. They're also in the top three television markets, in the same order.

While the Knicks and Celtics wouldn't discuss their numbers, New York's media advantage over Boston is clear. It's the No. 1 U.S. market, with 7.39 million television households, or 6.55 percent of the nation's total, according to data compiled by Nielsen Research Media Inc. Boston is seventh with 2.39 million households, or 2.1 percent.

New York Market

New York's size created ``substantial insulation'' from a season of bad news for the Knicks, said David Carter, executive director of the Sports Business Institute at the University of Southern California's Marshall School of Business.

``It's not surprising where you have the opportunity to generate a lot of local media dollars through television,'' he said.

The Celtics' championship run was buoyed by the preseason acquisition of all-stars Kevin Garnett and Ray Allen. The Knicks' 59 losses matched a team record. Only Miami, Seattle, Memphis and Minnesota had a worse winning percentage.

Turmoil characterized New York off the court as well. Thomas was fired April 18 as coach of the Knicks, six months after team-owner Cablevision Systems Corp. and Chief Executive Officer James Dolan lost a sexual-harassment lawsuit filed by former marketing executive Anucha Browne Sanders that centered on Thomas.

New Knicks Coach

Earlier in April, Thomas was relieved of his duties as team president and replaced by Donnie Walsh. Walsh then fired Thomas as coach and hired Mike D'Antoni.

The team's efforts to improve are ``well-documented,'' spokesman Jonathan Supranowitz said.

The Celtics' ownership is headed by Wyc Grousbeck, former general partner of Boston venture capital firm Highland Capital Partners; his father, H. Irving Grousbeck; and Stephen Pagliuca, a managing director of buyout firm Bain Capital Partners LLC, also based in Boston.

The Celtics' goal this year was to win a championship, Pagliuca said in an interview with Bloomberg Radio after the Celtics took the title by beating the Los Angeles Lakers four games to two in the best-of-seven series.

``The rest will take care of itself,'' he said when asked how the team would use its success to grow profits.

Expansion of Brand

Winning a championship in pro sports is typically followed by an increase in the team's valuation and an expansion of the brand, sports analysts said. For the Celtics, evidence is close at hand.

The New England Patriots, with Super Bowl victories in 2002, 2004 and 2005, have seen their value grow to $1.19 billion from $756 million in 2003, Forbes reported. They are third in NFL-team value behind the Dallas Cowboys at $1.5 billion and Washington Redskins at $1.47 billion, Forbes said. Team owner Robert Kraft is building Patriot Place, a $350-million retail and entertainment complex adjacent to Gillette Stadium.

The Boston Red Sox were bought in 2002 by a group led by John Henry, whose Boca Raton, Florida, investment firm runs commodities-futures and currency funds. The team became part of the owners' New England Sports Ventures, which, two years later, formed Fenway Sports Group to market the team brand.

Cross-Marketing

Last year that group bought a 50 percent stake in Nascar team Roush Racing. The Red Sox logo was painted on driver Carl Edwards's racecar at a Nascar race in Loudon, New Hampshire.

With this cross-marketing of sports and two World Series wins in 2004 and 2007, the Red Sox's worth has surged 67 percent to $816 million, according to a Forbes report in April.

The team's value still trails the $1.3 billion estimated worth of the New York Yankees and the $824 million value of the New York Mets.

``We will always be in the Yankees' shadow when it comes to revenue base and franchise valuation,'' said Sam Kennedy, executive vice president of Fenway Sports Group. ``It is a function of the sheer number of eyeballs and market size.''

Not that it matters to Boston fans.

To contact the reporters on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net; Tom Moroney in Boston at tmorrone@bloomberg.net

Last Updated: June 27, 2008 00:00 EDT